IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Income Risk and Household Schoo ling Decisions in Burkina Faso

  • Harounan Kazianga


    (Oklahoma State University)

study the effects of uncertainty in future income stream on household schooling decisions. The intuition is that households that face a more volatile income stream have more incentives to build up a buffer stock to insure against unforeseen adverse shocks, and non-enrollment can be part of such strategy. While there is a large literature which explores how negative income shocks impact human capital accumulation (especially education) when financial markets are incomplete and households can neither insure nor borrow to smooth their consumption, there has been little research on the cumulative effects of (perceived) income uncertainty on child education. This paper fills this gap on the literature which focuses on income shocks and education in developing countries. The empirical work uses data from rural Burkina Faso, an environment where school enrollment rates are low and households face frequent income shocks. Controlling for current economic shocks, household wealth levels and child characteristics, I find that income uncertainty reduces a number of educational outcomes, including current enrollment status, education expenditures per child, the number of years of education completed and the probability of having been ever enrolled. The estimation results suggest that income uncertainty might have large welfare costs in terms of human capital than implied by studies which focus on the ex-post response to economics shocks

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Oklahoma State University, Department of Economics and Legal Studies in Business in its series Economics Working Paper Series with number 0903.

in new window

Length: 50 pages
Date of creation: 2009
Date of revision:
Publication status: Published in World Development, 40(8), pages 1647-1662
Handle: RePEc:okl:wpaper:0903
Contact details of provider: Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Caballero, Ricardo J., 1990. "Consumption puzzles and precautionary savings," Journal of Monetary Economics, Elsevier, vol. 25(1), pages 113-136, January.
  2. Martin Browning & Annamaria Lusardi, 1996. "Household Saving: Micro Theories and Micro Facts," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1797-1855, December.
  3. Jeffrey M. Wooldridge, 2002. "Inverse probability weighted M-estimators for sample selection, attrition and stratification," CeMMAP working papers CWP11/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  4. Schady, Norbert R., 2001. "Convexity and sheepskin effects in the human capital earnings function : recent evidence for Filipino men," Policy Research Working Paper Series 2566, The World Bank.
  5. Stefan Dercon & Luc Christiaensen, 2007. "Consumption risk, technology adoption and poverty traps: evidence from Ethiopia," CSAE Working Paper Series 2007-06, Centre for the Study of African Economies, University of Oxford.
  6. Guiso, Luigi & Jappelli, Tullio & Terlizzese, Daniele, 1994. "Income Risk, Borrowing Constraints and Portfolio Choice," CEPR Discussion Papers 888, C.E.P.R. Discussion Papers.
  7. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
  8. Edmonds, Eric V., 2006. "Child labor and schooling responses to anticipated income in South Africa," Journal of Development Economics, Elsevier, vol. 81(2), pages 386-414, December.
  9. Marcel Fafchamps & Chris Udry & Katherine Czukas, . "Drought and Saving in West Africa: Are Livestock a Buffer Stock?," Working Papers 97013, Stanford University, Department of Economics.
  10. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low-Income Countries: Investment in Bullocks in India," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 223-44, April.
  11. Christopher D. Carroll, 1997. "Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 1-55.
  12. Alderman, Harold, 1996. "Saving and economic shocks in rural Pakistan," Journal of Development Economics, Elsevier, vol. 51(2), pages 343-365, December.
  13. T. Paul Schultz, 2003. "Evidence of Returns to Schooling in Africa from Household Surveys: Monitoring and Restructuring the Market for Education," Working Papers 875, Economic Growth Center, Yale University.
  14. S. Rao Aiyagari, 1993. "Uninsured idiosyncratic risk and aggregate saving," Working Papers 502, Federal Reserve Bank of Minneapolis.
  15. Yasuyuki Sawada & Michael Lokshin, 2007. "Obstacles to School Progression in Rural Pakistan: An Analysis of Gender and Sibling Rivalry Using Field Survey Data," CIRJE F-Series CIRJE-F-484, CIRJE, Faculty of Economics, University of Tokyo.
  16. Duryea, Suzanne & Arends-Kuenning, Mary, 2003. "School Attendance, Child Labor and Local Labor Market Fluctuations in Urban Brazil," World Development, Elsevier, vol. 31(7), pages 1165-1178, July.
  17. Harounan Kazianga, 2004. "Schooling Returns for Wage Earners in Burkina Faso: Evidence from the 1994 and 1998 National Surveys," Working Papers 892, Economic Growth Center, Yale University.
  18. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-91, May.
  19. Suzanne Duryea, 1998. "Children's Advancement Through School in Brazil: The Role of Transitory Shocks to Household Income," IDB Publications (Working Papers) 5679, Inter-American Development Bank.
  20. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
  21. Christopher D. Carroll & Miles S. Kimball, 2001. "Liquidity Constraints and Precautionary Saving," NBER Working Papers 8496, National Bureau of Economic Research, Inc.
  22. John Heaton & Deborah Lucas, 2000. "Portfolio Choice and Asset Prices: The Importance of Entrepreneurial Risk," Journal of Finance, American Finance Association, vol. 55(3), pages 1163-1198, 06.
  23. Emla Fitzsimons, 2007. "The Effects of Risk on Education in Indonesia," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 1-25.
  24. Kazianga, Harounan & Udry, Christopher, 2006. "Consumption smoothing? Livestock, insurance and drought in rural Burkina Faso," Journal of Development Economics, Elsevier, vol. 79(2), pages 413-446, April.
  25. Canagarajah, Sudharshan & Mazumdar, Dipak & Xiao Ye, 1998. "The structure and determinants of inequality and poverty reduction in Ghana, 1988-92," Policy Research Working Paper Series 1998, The World Bank.
  26. Chetty, Raj & Looney, Adam, 2006. "Consumption smoothing and the welfare consequences of social insurance in developing economies," Journal of Public Economics, Elsevier, vol. 90(12), pages 2351-2356, December.
  27. Albert Park, 2006. "Risk and Household Grain Management in Developing Countries," Economic Journal, Royal Economic Society, vol. 116(514), pages 1088-1115, October.
  28. Schultz, T. Paul, 1988. "Education investments and returns," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 1, chapter 13, pages 543-630 Elsevier.
  29. Jacoby, Hanan G, 1994. "Borrowing Constraints and Progress through School: Evidence from Peru," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 151-60, February.
  30. Bennell, Paul, 2002. "Hitting the Target: Doubling Primary School Enrollments in Sub-Saharan Africa by 2015," World Development, Elsevier, vol. 30(7), pages 1179-1194, July.
  31. Morduch, Jonathan, 1999. "Between the State and the Market: Can Informal Insurance Patch the Safety Net?," World Bank Research Observer, World Bank Group, vol. 14(2), pages 187-207, August.
  32. Fafchamps, Marcel & Pender, John, 1997. "Precautionary Saving, Credit Constraints, and Irreversible Investment: Theory and Evidence from Semiarid India," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(2), pages 180-94, April.
  33. Beegle, Kathleen & Dehejia, Rajeev H. & Gatti, Roberta, 2006. "Child labor and agricultural shocks," Journal of Development Economics, Elsevier, vol. 81(1), pages 80-96, October.
  34. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244, December.
  35. Robert Jensen, 2000. "Agricultural Volatility and Investments in Children," American Economic Review, American Economic Association, vol. 90(2), pages 399-404, May.
  36. Jolliffe, Dean, 1998. "Skills, Schooling, and Household Income in Ghana," World Bank Economic Review, World Bank Group, vol. 12(1), pages 81-104, January.
  37. Hanan G. Jacoby & Emmanuel Skoufias, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 311-335.
  38. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, vol. 82(1), pages 15-33, March.
  39. Simon Appleton and Arsene Balihuta, 1996. "Education and agricultural productivity: evidence from Uganda," Economics Series Working Papers WPS/1996-05, University of Oxford, Department of Economics.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:okl:wpaper:0903. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Harounan Kazianga)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.